The stock market continued its rally last week to build on the strong gains of the previous week. It’s possible that the stock market correction bottomed out a few weeks back on March 7th, with the S&P 500 dropping to 4157. Currently the S&P is around 4530 and more than halfway back to its previous highs of 4818. I’m watching to see if it rises and breaks through a key resistance level at 4600. If it breaks through this resistance level, it will be a positive sign that March 7th was most likely the correction low.
Technical Analysis, which is the analysis of stock market charts, is an important tool in how I forecast stock market movements. I focus my technical analysis on observing how the stock market behaves at support and resistance levels. When the stock market is declining it often will reverse directions at specific support levels, and conversely, when the market is rising it will often reverse at resistance levels. Technical analysis is as much of an art as it is a science, and the results require interpretation within the overall economic environment.
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